Page 414 - SBR Integrated Workbook STUDENT S18-J19
P. 414
Chapter 25
Example 2
Overseas transactions
1 The sale would be translated using the spot rate and recorded at $1.2
million (3m dinar/2.5).
Dr Receivables $1.2m
Cr Revenue $1.2m
Receivables are monetary assets so are retranslated at the reporting
date using the closing rate. The receivable needs to be reduced to $1.0
million (3m dinar/3) and a foreign exchange loss of $0.2 million ($1.2m –
$1.0m) recorded in profit or loss.
Dr P/L $0.2m
Cr Receivables $0.2m
2 The transaction would be translated using the spot rate and recorded at
$5 million (10m dinar/2)
Dr Intangible asset $5.0m
Cr Cash $5.0m
The intangible asset is amortised over its useful life of 5 years. The
amortisation charge is $1.0 million ($5m/5 years)
Dr P/L $1.0m
Cr Intangible asset $1.0m
The intangible asset is a non-monetary asset so is not retranslated.
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